Federal Health Officials: Rates On Public Exchanges Are Lower Than Expected

People who buy a health plan on a state-run insurance exchange this fall for coverage next year will likely pay less than federal budget officials anticipated, according to a new report released Thursday by the U.S. Department of Health and Human Services.

At issue are individual and small-group health plans that will be available through online marketplaces called "exchanges," created by each state as a result of the Affordable Care Act, which is sometimes called Obamacare.

A federal analysis of rates available on public exchanges in 10 different states and Washington D.C. shows that they are, on average, 18 percent less than an estimate in March 2012 by the Congressional Budget Office.

Federal health officials contend that lower-than-expected rates in some states constitute a national trend, which means, on average, premiums for health insurance will be lower in other states, too.

It's too early to say if that will be the case in Connecticut. State insurance regulators are still reviewing health plans submitted by five different insurers.

A trade group for health insurers said the federal report focuses on average premiums and ignores the actual rate an individual will pay.

"The impact that the ACA [Affordable Care Act] is going to have on premiums is going to vary considerably depending on a person's age, their health status, their gender, where they live and their income," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans. "All of those factors are going to impact ultimately what a specific individual will pay."

In Connecticut, the state Insurance Department is reviewing rates submitted by insurers for health plans that will be sold on Access Health CT, which is the public online marketplace in this state.

Aetna, Anthem Blue Cross and Blue Shield in Connecticut, ConnectiCare Benefits, HealthyCT and UnitedHealthcare all submitted proposed rates. Aetna is only offering individual plans, UnitedHealthcare is only offering small-group plans and the other three are competing in both markets.

The Insurance Department -- the insurance regulator in the state -- must review the actuarial assumptions for every health plan sold before it can be put through a different review by the Access Health CT. There is no estimate of when rates will be finalized, though health plans are expected to be sold through Access Health CT starting Oct. 1.

The federal HHS report released Thursday looked at rates approved in California, Colorado, Washington D.C., New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia and Washington. Health plans in all states will be sold with a rating like precious metals — platinum for the best plans, followed by gold, silver and bronze. The HHS report looked at silver plans, and the average monthly rate for individual plans is $321 across all 10 states and Washington D.C. compared with an estimated of $392 per month provided by the Congressional Budget Office last year.

The average rate for small-group plans was $352, compared with the CBO estimate of $392.

Some insurers that have submitted rates to Connecticut's insurance regulators are proposing rates lower than the CBO estimates, too. For example, Aetna proposed individual health plans that will range in cost from $111 to $1,175 per year, with an average monthly premium of $363.56.

"Today's report shows that the Affordable Care Act is working to increase transparency and competition among health insurance plans and drive premiums down," U.S. Health and Human Services Secretary Kathleen Sebelius said in a prepared statement Thursday. "The reforms in the health care law ensure consumers will have access to better coverage at a lower cost in 2014."

Zirkelbach said the report misses the point in comparing CBO estimates with rates in 10 states and Washington D.C.

"How do these premiums compare to what people are purchasing today, because there's wide variation in what individuals and small businesses are choosing to purchase," Zirkelbach said. "An individual who currently chooses to purchase a low-premium, high-deductible policy to protect themselves from medical bankruptcy is going to see a much bigger impact to their premium than someone who currently has comprehensive health care coverage."

The Affordable Care Act passed by Congress in March 2010 established health exchanges as a way to offer a competitive marketplace where individuals and small businesses may compare prices and shop for health plans. It's an optional place to buy coverage for those who don't have health insurance through an employer, a union or a government plan, such as Medicare, Medicaid or HUSKY.

Exchanges will be the only place that individuals and families who earn up to 400 percent of the federal poverty level — which is $44,680 for an individual or $92,200 for a family of four — may tap into federal subsidies to offset a portion of the cost of health insurance.

The HHS report does not take into account federal subsidies, which would make premiums even more affordable for those who qualify.

"Here in Connecticut, we are focused one hundred percent on implementing the law so that we can bring a broad choice of affordable, high quality health care options for the residents and small businesses of Connecticut," Access Health CT's chief executive Kevin Counihan said in a prepared statement. "…there will be glitches in the process but we remain dedicated to bringing the financial value and personal health security afforded by the ACA to the people of Connecticut."